Shares in Dell, the world’s second-largest personal computer manufacturer, were down 9.84 per cent in mid-morning trading after the company warned of “further softening” in global technology demand.

The warning follows the group’s prediction last month of “continued conservatism” in technology spending in the US,Western Europe and Asia, which came with a surprise 17 per cent fall in second quarter profits.

Yesterday, Dell's rival, Hewlett-Packard, the world’s biggest information technology group, announced plans to cut almost 25,000 jobs as part of its acquisition of Electronic Data Systems in May.

In a statement today, Dell said it expects to incur costs to “realign its business” as customers continue to rein in spending. The company added that it is taking action to improve competitiveness, reduce job numbers and invest in infrastructure and acquisitions – as well as looking at actions to cut costs in the long term.

Earlier this month the Wall Street Journal reported that the Texas-based group had approached contract computer manufacturers with offers to sell its plants in an attempt to reduce manufacturing costs as it struggles with profitability. Those it could not sell, the newspaper said, would be closed.

Dell employs 3,000 people at its production plant on the Raheen Industrial Estate in Limerick, including 2,000 in manufacturing and a further 1,000 in finance, marketing and other positions. Industry sources have suggested that production capacity at the plant, which opened in 1991, could be moved to Poland, where Dell opened a factory last year.

Last month, Dell posted a 17 per cent decline in second-quarter net income, largely due to its strategy to cut prices on its personal computers as the company rapidly expands into more retail stores and markets outside the US.

It also said in August that it had cut 8,500 jobs out of a planned 8,900, announced in April, as chief executive and founder Michael Dell said that the company would consider scaling back its rapid expansion in Europe.

In today’s statement, issued ahead of Bank of America’s 38th annual conference in San Francisco, where Dell executives will address investors later today, the group said it plans to continue its focus on global consumer, small and medium business, enterprise, notebooks and emerging countries.

It said that the group increased unit shipments faster than the industry in the first half of the year and expects the trend to continue for the full year.

Dell shares were down to $16.35, a drop of 9.12 per cent, in pre-market trading today after closing at $17.99 on Nasdaq yesterday.

Shares in Dell have fallen 35 per cent so far this year.

Times Recommends

• C&G axed - 1,660 jobs to be lost
• UK house prices rise 1.1% as buyers return
• Mixed reaction to US banks repaying bailouts